Global Recession Effects on Emerging Economies - Essay Example

This report stresses that global recession results to fluctuations in currency thus, affecting businesses that are mainly in the local economy. Local economies cater to the demands of the local market. They are dependent on the changes within their market. Local market demands are dependent on household and end-users budget and expenditures. When currency fluctuates, prices change affecting the production costs of companies and affecting the income and profit of end-users. This causes the market to have less demand due to buying power.

This paper makes a conclusion that local economies thrive on the local market. If their market cannot afford the products the local companies produce then this will significantly affect the supply and demand, and the production and investment of the companies. With this, companies tend to resort to cost-cutting, trying to keep up with the fluctuations in currency and the lower demands of their market. In the end, if they cannot adapt and keep up to these changes, the local company will fail and eventually become bankrupt.

Liberalization of the Chinese Market was remarkable for many reasons. It opened a new market for the Multinationals whose fortunes began sagging as demand in Europe had begun reaching saturation point. It offered a new manufacturing base for various industries. It opened new avenues of investments and finally it ushered in an era of relative peace as the threat of war and confrontation receded with the beginning of peace through trade partnerships. Trade that was earlier the reason of war had now became the agency of peace.